- USD/RUB has dropped about 65% from this year’s high.
- Rising natural gas and oil prices have helped the Russian ruble.
- The pair even rose despite Russia defaulting on foreign debt.
USD/RUB price hovers around 2015’s lowest mark as Russian rubble maintains strength. While publishing this content, the pair traded at 53.60, nearly 65% down from 2022 peaks. Meanwhile, USD-RUB has declined within the last four consecutive months.
Russia’s Foreign Debt Default
Russian economic condition emerged from the war in Ukraine stronger than earlier thought. For instance, the Russian ruble has gained against many currencies despite significant financial sanctions by western nations.
Several reasons explain this situation. First and foremost, Russia took advantage of its natural gas to demand ruble payments. That had the currency in massive demand by European nations. The narrative was vice versa before the COVID-19 pandemic.
Secondly, though western nations reduced their purchasing of Russian gas and oil, the country continued to sell to nations such as India and China. That saw Russia benefiting from the surging commodity prices.
Thirdly, the central bank of Russia continued to support the ruble through cash outflow laws. That means it’s challenging to transact foreign money from Russia at the moment.
Meanwhile, the USD/RUB maintained a downside on Monday despite Russia defaulting on its foreign-currency debt – that never happened this century. Russia was to pay foreign bondholders $100 million. Meanwhile, leaders have accused the stiff sanctions introduced by the west.
Last week’s statement by the government revealed plans to shift to sort the foreign debt using rubles. That’s a massive move as it will prevent global investors from funding Russia. For now, foreigners hold approximately $20B of the nation’s Eurobonds.
The ruble’s strength confirms Russia as a mighty nation. For instance, it helped lower the nation’s inflation within the last few months. Nevertheless, it poses challenges for Russia’s exporters.
According to the daily chart, USD-RUB maintained massive bearishness over the past couple of months. It saw accelerated plummets after moving beneath the 69.41 vital support. The pair remained beneath the 25 and 50 moving average, whereas the RSI drifted lower.
Thus USD/RBU will likely extend downside as bears aim for the 50 support. Meanwhile, an upswing beyond the 69 resistance will annul the bearish outlook.